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Profits at the Thames River Capital business that was acquired by UK fund manager F&C Asset Management rose during the 12 months to March 31, according to recently-filed accounts, though total profits, which include the firm's interest in a hedge-funds arm that F&C is not buying, fell.

Operating profits at Thames River Capital (UK) Ltd., which comprises the fund management company purchased by F&C, rose by 14% to £15.1m during the period. According to its accounts, filed at the UK regulator Companies House, this was due to "improved market performance coupled with strong inflows, leading to a growth in assets under management."

The accounts went on: "Thames River Multi-Capital [a funds-of-funds venture led by Robert Burdett and Gary Potter] has had a very strong year in terms of sales and became profitable in July 2009."

However, profits fell at Thames River Capital LLP, a related entity. This company is partnership comprising the firm's senior staff, including chief executive Charlie Porter and finance chief Jeremy Charles - and is the entity that takes in fee revenue in respect of the group's three businesses - Thames River Capital (UK) Ltd., Multi-Capital, and Nevsky Capital, a hedge-fund management subsidiary. The partnership made £20.6m in the year to March 31, down from £36.7m the year before.

Thanks to the way in which the group is structured, a portion of that £20.6m is passed back to Thames River Capital (UK) Limited, accounting for its profits. In future, F&C will be entitled to this share.

The accounts did not provide any explanation for the fall in profitability at the LLP, and Thames River declined to comment yesterday on its financial performance.

However, investment director Michael Warren said the group's net flows of new business had been positive since the end of March, and in particular, fixed-income funds, multi-manager and real estate products had done well.

These funds are among those which F&C will acquire. The hedge-fund manager Nevsky Capital, however, is to be de-merged from the group, according to the accounts, and will continue under the ownership of the current shareholders - the partners as well as the ultimate controlling party, financier Sir John Beckwith.

According to the accounts, the 32 people employed by Thames River LLP earned a total £6m between them during the 12 months, or around £187,000 each, on average. That was sharply down on total compensation of £7.2m the year before, split between 34 people. The fall was due to a decline in the amount paid out in incentive compensation - or performance bonuses.

As of March 31 2010 Thames River LLP had a total £3.7bn under management, slightly up from £3.6bn the year before. F&C has previously disclosed to the market that Thames River Ltd had gain a net £384m of new business in the first eight months of 2010.

On an analysts' conference call presenting the group's results in August, F&C chief executive Alain Grisay and finance director David Logan declined to elaborate further on the new subsidiary's business performance. Grisay said there will be an investor presentation giving further details on Thames River's performance on October 5.